Questions

1. On 1 January 2006, Mzalendo Traders sh.180000 in cash and sh.170000 at bank. During the month, the following transactions took place: 2006 January 10 paid ABM Traders sh.25, 000 by cheque less sh.1000 Cash discount.

2. Sold goods for sh. 14,000 cash, less 5% discount 31 Banked all the cash except sh.5200 Enter the above transactions in cash book extract given below and balance it off.(5mks) DR CASH BOOK EXTRACT CR Date particul a Discou n allowed cash Bank Date Particul aDiscoun receive d Cash Bank y

(a)

(b)

(c)

(d) Output x Price . Sh. Sh. Sh. Sh. Sh. 13. Outline four benefits to abusiness that uses its own warehouse. (4mks) a) ................................................................................................

b) ................................................................................................

c) ................................................................................................

d) ...............................................................................................

3. Identify the book of original entry used in recording each of the following transactions of Soya Traders. (4mks) Transaction Book of original entry

(a) Sold goods on credit to Wanjau for sh.20,000

(b) Bought goods on credit from Saipei Traders for 1000.

(c) A chieng returned goods worth sh.6000

(d) Soya returned goods worth sh.11000 to Nzome T

4. The following information related to Kerubo Traders for the year ended 31 December, 2006. Sh. Opening stock 24,000 Carriage on sales 12,000 Purchases 370,000 Sales 442,500 Closing stock 40,000 Other expenses 10% on Gross profit. Prepare Trading profit and Loss Account for the year ended 31 December, 2006. (5mks) ............................................................................................................ ............................................................................................................ . ............................................................................................................ ............................................................................................................ ............................................................................................................ ............................................................................................................ ............................................................................................................ ....................................

5. The average consumer price for a500g container of cooking fat for various years is shown in the table below. year Consumer price Kshs. Consumer price Index 2000 2001 2002 2003 47 53 62 74 100 - - - Calculate the consumer price index using year 2000 as the base year .(3mks)

6. State four ways that may be used to control the amount of money in circulation by the central Bank of Kenya. a) .......................................................................................... ..........................................................................................

b) .......................................................................................... ..........................................................................................

c) .......................................................................................... ..........................................................................................

d) ......................................................................................... ..........................................................................................

7. Outline four differences between a good and a service. (4mks) a) ..........................................................................................

b) ..........................................................................................

c) .......................................................................................... .

d) ..........................................................................................

8. Highlight four factors that could influence mobility of capital as a factor of production. (4mks) a) .........................................................................................

b) .........................................................................................

c) .........................................................................................

d) .........................................................................................

9. State four advantages of an open office layout to an organization. (4mks)

a) ........................................................................................

b) ........................................................................................

c) ........................................................................................

d) ........................................................................................

9. Highlight four ways in which the running of public corporations may be improved. (4mks) a) ..........................................................................................

b) ..........................................................................................

c) ..........................................................................................

10. State four reasons why countries may decide to trade with each other. (4mks)

a) .......................................................................................

b) ........................................................................................ c) .........................................................................................

d) .........................................................................................

11. Outline four benefits that accrue to a customer who uses automated teller machine (ATM) banking service. (4mks)

a) ..........................................................................................

b) ..........................................................................................

c) ..........................................................................................

d) ..........................................................................................

12. State four factors that could hasten the economic development of a country. (4mks) a) ..........................................................................................

b) ..........................................................................................

13. Outline four elements that may comprise the external environment of a business. (4mks) a) ........................................................................................

b) ........................................................................................ . 565/2 Business studies Paper 2 Octo. /Nov. 2007 2 hours. 1. a) Explain six reasons why a new business may fail (12mks)

b) Explain four advantages of transaction business through e-commerce. (8mks)

2a) Explain six sources of government revenue for development expenditure. (12mks)

b) Karani does not keep a complete set of accounting records.During the year ended 30 June 2006, the following balances were extracted from the books of accounts. Sh. Stock 140,000 Land and buildings 500,000 Cash in hand 2500,000 Cash at bank 120,000 Credit 240,000 Long term loan 1400.000 Plant and machinery 600,000 Additional information: Karani drew sh. 140,000 from the business for private use. Opening capital was sh.2000 000 as at 1 July 2005 Additional capital during the year was sh.120,000. i) Prepare statement of affairs for the year ended 30 june 2006

ii) Determine profit or loss for the year ended 30 june 2006

3. a) explain five ways is which the Agriculture Finance Corporation(AFC)

b) Explain five factors that could affect the quantities of cabbages supplied in a market. (10mks)

4 a) Explain five strategies that a small

- scale firm could adopt to expand so as to enjoy economies of scale. (10mks)

b) Explain five benefits that could accrue to a customer who buys goods from a departmental store. (10mks)

5. a) Discuss five reasons why less developed countries are reluctant in implementing free trade agreement. (10mks) b) Draw a diagram to show how equilibrium price and output are determined undermonopoly. (10mks) .

6. a) Explain five features that you would consider in establishing a warehouse for imported goods. (10mks)

b) The following trial balance was prepared from the books of Mugambi Traders for the year ended 31 December 2005 Mugambi Traders Trial Balance Dr Cr Kshs Kshs Land and buildings 500,000 Capital 940,000 Plant & Machinery 200,000 Motor Vehicles 300,000 10 year bank loan 200,000 3 year ICDC loan 100,000 Stock 100,000 Debtors 60,000 Creditors 60,000 Accrued expenses 20,000 Cash at Bank 100,000 Cash in hand 20,000 Drawings 40,000 Prepare (i) A balance sheet for the year ended 31 December 2005 (ii) Determine Working capital Capital employed Borrowed capital ( 10 marks)